Cormier v. Turnkey Cleaning Services L L C

Filing 170

ORDER: For the reasons herein, the 157 Motion for Reconsideration re 156 Order on Motion to Dismiss for Failure to State a Claim is denied. Since the Court has not yet had sufficient opportunity to consider the submissions of the parties, Scottsdale's 157 Motion for Clarification is premature. Signed by Magistrate Judge Patrick J Hanna on 11/14/2016. (crt,Alexander, E) Modified date filed on 11/15/2016. (Alexander, E)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
JUSTIN CORMIER, ET AL.

*CIVIL NO. 6:15-2076

VERSUS

*MAGISTRATE JUDGE HANNA

TURNKEY CLEANING
SERVICES, LLC., ET AL.

*BY CONSENT OF THE PARTIES

ORDER
Before the Court is the Motion to Reconsider filed by the defendant Scottsdale
Insurance Company ("Scottsdale"), which seeks reconsideration of this Court's
September 28, 2016 Order entered following the September 27, 2016 hearing of
Scottsdale's Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. [rec. doc. 157]. Plaintiff, Justin Cormier ("Cormier"), and defendant, Dale
P. Martin, Jr. ("Martin"), have filed Opposition, to which Scottsdale filed a Reply. [rec.
docs. 163, 164 and 165].
The Court's September 28, 2016 Order memorialized the agreement of counsel,
entered during the September 27, 2016 hearing of Scottsdale's Rule 12(b)(6) Motion to
Dismiss that the procedural arguments asserted in the Motion to Dismiss, namely,
whether Cormier can maintain a direct action against Scottsdale because the FLSA
preempts the Louisiana direct action statute, and whether an FLSA claim is a contract
claim which falls outside the purview of the Louisiana direct action statute, were

withdrawn, and accordingly, the sole issue remaining before the Court for disposition is
whether the Scottsdale policy excludes coverage for the FLSA wage and hour claims
brought by the plaintiffs. The September 28, 2016 Order additionally memorialized the
Court's conversion of Scottsdale's Rule 12(b)(6) Motion to Dismiss to a Motion for
Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. [rec.
doc. 156].
By this Motion, Scottsdale seeks reinstatement of its procedural arguments on
grounds that it did not intend to withdraw its procedural arguments, and to the extent
the counsel withdrew those arguments, counsel was without authority to do so.
Scottsdale additionally seeks reversal of this Court's conversion of its Motion to
Dismiss to a Motion for Summary Judgment. Alternatively, in the event the Court
maintains its prior conversion of the Motion to Dismiss to a Motion for Summary
Judgment, Scottsdale seeks clarification of the scope of discovery permitted by the
Court.
For the following reasons, the Motion to Reconsider [rec. doc. 157] is denied.
The Federal Rules of Civil Procedure do not recognize a motion for
reconsideration per se. Shield Pack, LLC v. CDF Corp., 2010 WL 4719431, *1 (W.D.
La. 2010). Nevertheless, motions requesting reconsideration of court orders have been
construed as falling under Rule 54(b), Rule 59(e), or Rule 60(b) of the Federal Rules of
Civil Procedure. Collins v. Brice Building Co., LLC, 2013 WL 121655, *2 (E.D. La.
2

2013) (and cases cited therein). Rules 59 and 60 apply only to final judgments. Id.
When a party seeks to revise an order that adjudicates fewer than all the claims among
all of the parties, then Rule 54(b) controls. Id. Under Rule 54(b), the district court
possesses the inherent power to reconsider, rescind, or modify an interlocutory order for
cause seen by it to be sufficient. Id. citing Fed.R.Civ.P. 54(b)1. Because the Court's
September 28, 2016 Order is not a final judgment, but rather an interlocutory order that
addresses the rights of fewer than all parties to this suit, Rule 54(b) governs. Rule
54(b) motions are construed under the same standards that govern Rule 59(e) motions
to alter or amend a final judgment. Id. (and cases cited therein); Hearne v. Kansas City
Southern R. Co., 2015 WL 5708291, *2 (W.D. La. 2015); see also Leong v. Cellco
P'ship, 2013 WL 4009320, at *3 (W.D. La. 2013).
“A Rule 59(e) motion ‘calls into question the correctness of a judgment.’”
Templet v. HydroChem Inc., 367 F.3d 473, 478 (5th Cir. 2004), quoting In re
Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002); Shield Pack, 2010 WL
4719431, at *1. To prevail on a Rule 59(e) motion, the moving party must "clearly
establish either a manifest error of law or fact or must present newly discovered
evidence." Simon v. United States , 891 F.2d 1154, 1159 (5th Cir. 1990). When a party
contends there has been a clear error of law or manifest injustice, “courts caution ‘that
1

Federal Rule of Civil Procedure 54(b) provides that an order that adjudicates fewer than
all the claims among all the parties “may be revised at any time” before the entry of a final
judgment.
3

any litigant considering bringing a motion on that ground should evaluate whether what
may seem to be a clear error of law is in fact simply a point of disagreement between
the Court and the litigant.”’ Arena v. Graybar Electric Company, Inc., 2010 WL
3944942, *1 (W.D. La. 2010), reversed on other grounds, 669 F.3d 214 (5th Cir. 2012 )
quoting Atkins v. Marathon LeTourneau, Co., 130 F.R.D. 625, 627 (S.D. Miss. 1990)
and Durkin v. Taylor, 444 F.Supp. 879, 889 (E.D. Va.1977) “A party seeking
reconsideration must show more than disagreement with the court's decision. . . . .”
Sundaram v. Flagstar Bank FSB, 2012 WL 5336209, *2 (S.D. Tex. 2012), citing
Texaco Exploration & Prod., Inc. v. Smackco, Ltd., 1999 WL 539548, *1 (E.D. La.
1999). “Whatever may be the purpose of Rule 59(e) it should not be supposed that it is
intended to give an unhappy litigant one additional chance to sway the judge.” Id.
quoting Atkins, 130 F.R.D. at 626. Moreover, Rule 59 motions should not be used to
relitigate old matters, raise new arguments, or submit evidence that could have been
presented earlier in the proceedings. Templet, 367 F.3d at 479 ; Rosenblatt v. United
Way of Greater Houston, 607 F.3d 413, 419 (5th Cir.2010); Shield Pack, 2010 WL
4719431 at *1, citing Templet.
In considering a Rule 59(e) motion, Courts must attempt to strike the proper
balance between two competing imperatives: (1) finality, and (2) the need to render a
just decision. Edward H. Bohlin Co., Inc. v. Banning Co., Inc,, 6 F.3d 350, 355 (5th Cir.
4

1993). In general, reconsideration of a judgment “is an extraordinary remedy that
should be used sparingly.” Templet, 367 F.3d at 479 citing Clancy v. Employers Health
Ins. Co., 101 F.Supp.2d 463, 465 (E.D. La. 2000) (citing 11 Charles A. Wright, Arthur
R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2810.1, at 124 (2d ed.
1995); Shield Pack, 2010 WL 4719431 at *1 citing Templet. Accordingly, the
standards which apply to Rule 59(e) Motions favor denial of such a Motion. Southern
Constructors Group, Inc. v. Dynalectric Co., 2 F.3d 606, 611 (5th Cir. 1993).
Scottsdale fails to satisfy this stringent standard. Accordingly, Scottsdale's
Motion to Reconsider is denied. This Court's September 28, 2016 Order will remain in
effect without reversal, modification, or clarification.
Withdrawal of Procedural Arguments by Counsel
Scottsdale argues that "there may have been a miscommunication with respect to
the withdrawal of [its direct action and preemption] arguments" and that it "did not
intend to withdraw these arguments. . . . " [rec. doc. 157-1, pg. 2 and 10]. Scottsdale
further argues that if the arguments were withdrawn by counsel, Mr. West, it "did not
authorize counsel to withdraw them." Id.
The Court has examined the transcript of the September 27, 2016 hearing and
finds that there was no miscommunication. During Mr. West's argument, the Court
initially advised that it "was not running with [Scottsdale]" with respect to its
preemption argument as the case relied upon by Scottsdale "was a different kind of
5

case." [rec. doc. 159, pg. 8]. The Court then went on to explain how the direct action
statute applies in a "garden variety direct action claim." [Id.] However, if the direct
action statute does not apply, as argued by Scottsdale in their Motion, and the case
proceeded to trial solely against an insolvent defendant and a judgment was rendered
against Turnkey, then Turnkey would seek coverage under the policy and the parties
would "all be back here again arguing about policy defenses." [Id. at pg. 8-9].
Therefore, the Court proposed the following:
So kind of from a judicial efficiency standpoint - - and I believe there is
case law, and I'm sure the plaintiffs are going to tell me about it, that says
that an FLSA case does have a tort element to it, albeit an intentional tort.
So, I'll tell you that my inclination at this point, unless you want to
persuade me otherwise, is that there is enough authority to say they can
bring the claim, which allows me to address the policy language itself.
And I don't think preemption applies. That was a different context.
[Id. at pg. 9].2
The Court then expressly asked Mr. West, "Do you have a big problem with that
result, Mr. West?" [Id.]. Mr. West responded clearly and without hesitation, "I do not,
Your Honor." [Id.].
The Court then expressly asked plaintiffs' counsel, "Well, you heard what I just

2

In the current motion, Scottsdale points out that the contemplated discovery by the
plaintiffs would needlessly erode the policy limits leaving less potential benefits to the class
members. If this case proceeded against an insolvent defendant through trial and then through a
subsequent garnishment action on the policy in the event an adverse judgment was rendered
against Turnkey, no doubt the policy limits would be far more significantly eroded than they
would should limited discovery take place on the policy defenses themselves at this stage of the
litigation.
6

said to Mr. West. Do you agree with that?" [Id. at 10]. Plaintiffs' counsel likewise
agreed. [Id.].
The Court then re-confirmed:

I think I can justify it with the jurisprudence, but if everybody is kind of
okay with that - - I mean, we might as well get to the meat of the coconut
instead of go have a trial against an insolvent defendant and come back
here and argue the same thing.
[Id.].
During this entire colloquy, Mr. West voiced no objection. To the contrary, he
expressly agreed with the Court's proposal thereby waiving Scottsdale's procedural
arguments, which were unique to the procedural posture of this case given that the
plaintiffs and not Turnkey had sued Scottsdale, so that the Court could resolve the
ultimate question, that is, whether the Scottsdale policy excludes coverage for wage and
hour claims. Indeed, had counsel not waived Scottsdale's procedural claims, the Court
would have, as advised, simply rejected those arguments for the reasons stated by the
Court on the record.3
Further, although Scottsdale now argues that its counsel, Mr. West, was without
authority to waive its procedural claims, that argument fails to meet the stringent

3

Interestingly, by Reply Scottsdale's counsel states that he was acknowledging the Court's
rejection of Scottsdale's procedural arguments rather than agreeing to withdrawal of same. [rec.
doc. 165-1, ¶5].
7

standard required for this Court to reconsider its September 28, 2016 Order. More
specifically, Scottsdale fails to demonstrate that this Court has committed a manifest
error of law or fact, or that there has been any manifest injustice.4 Insurers, like other
corporate and business entities, must appear in court through counsel. See Rule 83.2.5
of the Local Rules of the United States District Court for the Western District of
Louisiana (“[i]n all cases before this court, any party who does not appear in proper
person must be represented by a member of the bar of this court. . . .”); 28 U.S.C. §
1654 ("In all courts of the United States the parties may plead and conduct their own
cases personally or by counsel. . . . "); see also Rowland v. California Men's Colony,
Unit II Men's Advisory Council, 506 U.S. 194, 202-203 (1993) ("It has been the law for
the better part of two centuries. . . that a corporation may appear in the federal courts
only through licensed counsel. . . the rationale for that rule applies equally to all
artificial entities."). Accordingly, this Court must be able to rely on the representations
of counsel appearing in open court on behalf of such clients. See Davidson v. Georgia
Pacific, LLC, 2014 WL 801342, * 5 (W.D. La. 2014), citing Police Jury of Tangipahoa
Parish v. Begnaud, 9 So.2d 399, 401 (La. 1942) (“It is not to be presumed that an
attorney at law who appears in court as the representative of a client is acting without
authority.”). This aspect of Scottsdale’s motion is therefore denied.
4

Scottsdale has likewise not demonstrated that there been an intervening change in the
law to justify reconsideration, nor does the Court consider Mr. West's affidavit as new evidence
contemplated by the Rules necessitating reconsideration.
8

Conversion of Scottsdale's Motion to Dismiss
Scottsdale argues that this Court was not required to convert its Motion to
Dismiss to a Motion for Summary Judgment as this Court may consider the policy on a
Motion to Dismiss because the policy is referred to in the plaintiffs' second amended
complaint and is central to their claim. See Collins v. Morgan Stanley Dean Witter, 224
F.3d 496, 498–499 (5th Cir. 2000). Accordingly, because this Court has the authority
to resolve this dispute on a Motion to Dismiss, Scottsdale argues that it should exercise
that authority. Nevertheless, as acknowledged by Scottsdale in its Reply,5 under Rule
12(d) this Court has complete discretion to determine whether or not to accept any
material beyond the pleadings and thereby convert a Motion to Dismiss to a Motion for
Summary Judgment. See Isquith ex rel. Isquith v. Middle S. Utils., Inc., 847 F.2d 186,
194 n. 3 (5th Cir.1988); Ware v. Associated Milk Producers, Inc., 614 F.2d 413,
414–15 (5th Cir. 1980); see also Crowe v. Hoffman, 2013 WL 357006, *1 (E.D. La.
2013).
Scottsdale essentially now argues, as it did in its Motion to Dismiss, that its
policy language is clear and unambiguous and unequivocally excludes coverage for the
plaintiffs' claims. Thus, extrinsic evidence was unnecessary to resolve the coverage
issue. Cormier and Martin disagree. In their Opposition to both the original Motion

5

See rec. doc. 165, pg. 2 "This Court undoubtedly has the discretion to convert
Scottsdale's Motion under Rule 12(d)...."
9

and the instant Motion for reconsideration, both Cormier and Martin argue that the
policy language is ambiguous and leads to absurd results. Both requested reasonable
discovery to resolve these ambiguities.
The Louisiana Supreme Court long ago succinctly set forth the obligation of this
Court:
The purpose of liability insurance is to afford the insured protection from
damage claims. Insurance contracts, therefore, should be interpreted to
effect, not deny, coverage. . . The extent of coverage is determined from
the intent of the parties as reflected by the words of the insurance policy.
The role of the judiciary in interpreting insurance contracts is to ascertain
the common intent of the insured and insurer as reflected by the words in
the policy. . . When the words of an insurance contract are clear and
explicit and lead to no absurd consequences, courts must enforce the
contract as written and may make no further interpretation in search of the
parties' intent.
Words in an insurance contract are to be given their generally prevailing
and ordinary meaning, unless they have acquired a technical meaning. . .
Courts lack the authority to alter the terms of insurance contracts under the
guise of contractual interpretation when the policy's provisions are
couched in unambiguous terms. . . . An insurance contract is construed as a
whole and each provision in the policy must be interpreted in light of the
other provisions so that each is given meaning. One portion of the policy
should not be construed separately at the expense of disregarding other
provisions. . . . An insurance contract, however, should not be interpreted
in an unreasonable or strained manner under the guise of contractual
interpretation to enlarge or to restrict its provisions beyond what is
reasonably contemplated by unambiguous terms or achieve an absurd
conclusion. . . . That is, the rules of construction do not authorize a
perversion of the words or the exercise of inventive powers to create an
ambiguity where none exists or the making of a new contract when the
terms express with sufficient clearness the parties' intent. . . If, after
applying the other general rules of construction, an ambiguity remains, the
ambiguous contractual provision is to be construed against the insurer who
10

furnished the policy's text and in favor of the insured finding coverage.
Peterson v. Schimek, 98-1712, 729 So.2d 1024, 1028-1029 (La. 3/2/99) (citations
omitted)
During the September 27, 2016 hearing, the Court examined the policy language
including the definitions. Specifically, the definitions contained in the “Employment
Practices Coverage Section” of Scottsdale’s Business and Management Indemnity
Policy are as follows:
4. Employees means any person who was, now is or shall become:
a. a full-time or part-time employee of the Company, including interns,
voluntary seasonal and temporary employees;
b. any individual who applies for employment with the Company; and
c. any natural person who is a leased employee or is contracted to perform
work for the Company, or are independent contractors of the Company,
but only to the extent such individual performs work or services for or on
behalf of the Company.6
****
7. Insured Persons means all persons who were, now are or shall become:
a. a director or officer of the Company7;
b. any Employee; and
c. the functional equivalent of a director, officer or Employee in the event
the Company is incorporated or domiciled outside the United States.
8. Insureds means the Company and any Insured Persons.
The insuring clause found in Endorsement 36 provides coverage for “Costs,
Charges and Expenses of the Insureds which the Insureds have become legally
6

This definition is contained in Endorsement No. 3. of Scottsdale’s policy and alters the
original definition to include interns.
7

Endorsement 4 of Scottsdale's policy adds members of the management board and
management committee.
11

obligated to pay by reason of a Wage and Hour Claim . . . for a Wage and Hour
Wrongful Act. . .”
Applying these definitions to the insuring clause, Scottsdale would be required to
pay costs, charges, and expenses to the Company (Turnkey) and any persons who
“were, now are or shall become” directors, officers, full or part-time employees, interns,
voluntary and seasonal and temporary employees, as well as any person “who was, now
are or shall become an individual who applies for employment” if the costs, charges,
and expenses were incurred by reason of a Wage and Hour Claim for a Wage and Hour
Wrongful Act. In short, every person who ever was a company employee or officer – or
ever was to apply to become an employee or a director or officer – could be an
“Insured” under this section of the policy – even people not normally considered
“employees” when the term is given its usual meaning, rendering the definitions
capable of multiple meanings.
The “Directors and Officers and Company Coverage Section” of the same policy,
contains the following definitions:
4. Directors and Officers means any person who was, now is, or shall
become:
a. a duly elected or appointed director, officer or similar executive of the
Company, or any member of the management board of the Company;
b. a person who was, is or shall become a full-time or part-time employee
of the Company; and
c. the functional equivalent of directors or officers of a Company

12

incorporated or domiciled outside the United States of America.8
5. Insured means the Company and the Directors and Officers.
Thus, every person who "was, is or shall become a full-time or part-time
employee” of the Company is not only a Director or Officer, but an Insured. If
Directors and Officers were intended to include every past and future and possible full
or part-time employee, then the generally recognized and accepted need for Directors
and Officers insurance coverage would be rendered meaningless. Further, since the
“Insured” purportedly agreed to this policy language, then the insured would include
every past and future employee, i.e. all the plaintiffs in this collective action, and all
would have had to agree – a point this Court finds highly unlikely as to Scottsdale’s
intent.
At the September 27, 2016 hearing, this Court stated that it "found it puzzling
that a D&O policy would include every employee that there is as a D&O." The Court
had "never seen a definition like this and it troubles me" and that the Court was
therefore "in unchartered waters." [rec, doc. 159, pg. 11 and 23].
The Court thus preliminarily suggested that the policy could be construed as
ambiguous and could be read to lead to absurd results. Since by Scottsdale’s
interpretation of its own definition, every past or future employee could be an

8

Endorsement 19 expands this definition to include other persons not pertinent to this
Court’s analysis at this point.
13

“Insured,” whether under the Employment Practices section or the Directors and
Officers section, this Court determined that it would accept matters outside the
pleadings of this collective action and determine the issues under the rules applicable to
summary judgment motions.9 10 [See Id. at pg. 22].
By this Motion, without providing anything which was not available prior to this
Court's September 28, 2016 Order, Scottsdale merely reasserts its prior arguments that
the policy clearly and unequivocally excludes coverage and that extrinsic evidence is

9

It is well settled that a court may consider extrinsic evidence to determine the intent of
the parties to an insurance contract if the policy language is ambiguous. Entergy Louisiana, Inc.
v. National Union Fire Ins. Co. of Pittsburgh, 1999 WL 599314, *1 (E.D. La. 1999); Fontenot v.
Diamond B. Marine Services, Inc., 937 So.2d 425, 428-429 (La. App. 4th Cir. 2006) citing
Highlands Underwriters Ins. Co. v. Foley, 691 So.2d 1336, 1340-1341 (La. App. 1st Cir. 1997);
Patterson v. City of New Orleans, 686 So.2d 87, 90 (La.App. 4th Cir.1996); St. Paul Fire &
Marine Ins. Co. v. Pahm, 2007 WL 1466747, *3 (M.D. La. 2007) citing Breland v. Shilling, 550
So.2d 609, 610-611 (La. 1989) citing La. C.C. art. 2045 (Ambiguity may also be resolved by
ascertaining how a reasonable insurance policy purchaser would construe the clause at the time
the insurance contract was entered.); see also Lloyds of London v. Transcontinental Gas Pipe
Line Corp., 101 F.3d 425, 428-429 (5th Cir. 1996) (upon finding a term of the contract
ambiguous the court will consider extrinsic evidence in interpreting its meaning). Indeed, in
situations of ambiguity where extrinsic evidence was not considered, the Fifth Circuit has
ordered cases remanded to allow consideration of the extrinsic evidence in determining the
meaning of an ambiguous provision. Lightfoot v. Hartford Fire Ins. Co., 2012 WL 1014985, *3
(E.D. La. 2012) citing Hettig & Co. v. Union Mut. Life Ins. Co., 781 F.2d 1141, 1143, 1146 (5th
Cir. 1986) and City of El Paso v. El Paso Entertainment, Inc., 382 Fed. Appx. 361, 368 (5th Cir.
2010).
10

Moreover, the Declarations section of the policy provides:
These Declarations, together with the Application, Coverage
Sections, General Terms and Conditions and any written
endorsement(s) attached thereto, shall constitute the contract
between the Insured and the Insurer.”

There was no Application attached as an exhibit to the policy, thereby presenting yet
another ambiguity.
14

unnecessary, arguments which were previously considered and rejected by this Court.
Although Scottsdale disagrees with this Court's determination that the Motion will be
converted and determined under the standards applicable to summary judgment motions
after an adequate opportunity for discovery, such disagreement does not present a clear
error of law or fact, nor manifest injustice. Scottsdale's request for an additional chance
to sway the Court is simply not appropriate. See Arena quoting Atkins and Durkin;
Sundaram citing Texaco Exploration & Prod., Inc. and Atkins, supra.
Request for Clarification
The Court also need not clarify the scope of discovery which will be permitted in
the context of this Motion to reconsider. As previously stated during the September 27,
2016 hearing,11 the Court will address the nature and scope of the discovery which will
be permitted after considering the Rule 56(d) and Rule 12(d) submissions of the parties.
Since the Court has not yet had sufficient opportunity to consider the submissions of
the parties, Scottsdale's request for clarification is premature.
Signed this 14th day of November 2016, at Lafayette, Louisiana.

________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE
11

During the September 27, 2016 hearing, the Court told the parties, "When you tell me
what you need, I'll let you know what you can have." Interestingly, Mr. West responded, "That's
fair, Your Honor." [rec. doc. 159, pg. 23].
15